30. Sales Forecasting

Question 1

Most popular technique used to predict future trends

Answer 1

Time series analysis

Question 2

Components a business wants to identify in time series data:

Answer 2

• The trend
• Seasonal fluctuations
• Cyclical fluctuations
• Random fluctuations

Question 3

Benefits of sales forecasting:

Answer 3

• Forecasts inform cash flow predictions
• Allow the business to pland orders of suppliers and components
• Enable the business to ensure it has the correct staffing levels for the predicted sales
• Enable the business to ensure that it has the capacity to meet the predicted orders

Question 4

Factors affecting sales forecasting:

Answer 4

· Consumer trends:
- Seasonal variations
- Fashion
- Long-term trends

· Economic variables:
- Economic growth
- Interest rates
- Inflation
- Unemployment
- Exchange rates

· Actions of competitors
- Pricing
- Promotion

Question 5

Difficulties of sales forecasting:

Answer 5

• Volatile consumer tastes and preferences
• Range of data
• Subjective expert opinion

Question 6

Consumer income

Answer 6

The amount of income remaining after taxes and expenses have been deducted from wages

Question 7

Consumer trends

Answer 7

The habits or behaviours of consumers that determine the goods and services they buy

Question 8

economic growth

Answer 8

the rise in output of an economy as measured by the growth in Gross Domestic Product (GDP) usually as a percentage

Question 9

Economic variables

Answer 9

measures within the economy which have effects on business and consumers. Examples include unemployment, inflation and exchange rates

Question 10

Extrapolation

Answer 10

Forecasting future trends based on past data

Question 11

Forecasting

Answer 11

A business process, assessing the probable outcome of using assumptions about the future

Question 12

Sales forecast

Answer 12

Prediction of the future sales revenue, often based on previous sales data

Question 13

time series data

Answer 13

A method that allows a business to predict future levels from past figures